In my younger days, I was fascinated with the notion of becoming wealthy with a minimal amount of effort. To that end I scraped and saved enough pennies to become the proud owner of a copy of the late Joe Karbo’s best seller, The Lazy Man’s Way to Riches. Imagine my disappointment when I realized that significant effort was still required, albeit in a different manner. If the book were updated today, I would think it would gloss over the time and coding required to attain website SEO success and focus on the rewards – while ignoring the fact that only a few will reach that level.
My quest for the laziest way to make money was not in vain as I stumbled onto dividend oriented investing forty years ago. Essentially one can spend as much – or little – time and effort as they want in this regard. One person can use a set-it and forget-it strategy while another can be actively involved. Or in my case, I’ve used both. While I recovered from my strokes, my portfolio was on auto-pilot accumulating dividends awaiting my return. For over a year – and it didn’t miss a beat.
The complaint I’ve most often heard is that it takes too long to see results and this endeavor does require patience to get the snowball rolling – probably five to seven years. But once it gains momentum it is a force to be reckoned with.
This is a meandering way to get to this weeks’ point. I’m really not that much into goals at this stage, but since I’m basically a let the portfolio do its own thing type of guy, there are times when adjustments just have to be made and framing them as goals could be beneficial. For this year, perhaps you can refer to me as an active manager. The broader theme was my desire to reduce the number of holdings and so far I’ve dropped two (XRX and MSGN) but added two (FTS and TMXXF). Currently, this is a wash. On my monthly reports – with the exception of the new and sold positions – all of the activity nets out with an increase in the value of the stocks retained – which will probably be the case throughout the year.
Goal – consolidate all Canadian stocks across multiple accounts into the IRA
Rationale – the tax treaty between the countries allows most holdings to be exempt from the 15% Canadian tax withholding
Funding Source – the sale of PB from my IRA (leaving a slightly larger position in a taxable account)
Actions Required –
- Ensure all have no Canadian taxed dividends
- RY, PWCDF are confirms
- BCE, CM, BNS, CP, CNI, TRP, TD, BMO, ENB, TMXXF, MFC, SLF, HRNNF, TU, RCI, FTS are pending confirmation
- If any are taxed, file appeals
- If appeal denied, review for possible sale
- If confirmed, add to TRP, TD, BMO, MFC, HRNNF positions
- Close out remaining taxable Canadian positions including NTR and AMTD (US)
Over the years I’ve received conflicting answers on the taxability issue. With free trades I can get the real answer with the next dividend payment. I have 20 current Canadian positions plus AMTD (American, but I grouped it with the Canadians due to TD’s ownership stake). NTR and AMTD (merger) will be closed positions – probably in April. End result will be more room for foreign dividends to stay under the Form 1116 filing cap.
Goal – Migrate a few issues from Motif to Webull
Rationale – Webull has a promotion too good to pass
Funding Source – petty cash to be replenished by the sale of the same issues in Motif (timed to avoid wash rule issues – if applicable)
My issue with Motif is that they are late to the party on free trades, so I’m beginning to take some money off their table. Although not fond of Webull (they are in the same camp as Schwab with paying stock dividends as cash-in-lieu rather than fractionals), getting three free stocks is a return equivalent to an immediate 5% (or more). As my moniker implies, I seek returns where I find them.
Goal – Add cash to spousal IRA
Rationale – Reduce tax liability
Funding Source – emergency cash to be replenished by the anticipated tax refund
For the first time in years, we have some earned income which enables us to contribute. This will be done into the spousal one which is not subject to RMDs (yet).
Goal – Address RMDs without liquidating stock
Rationale – Keep the snowball alive
Funding Source – accrued surplus dividends
Our planning for this event was done a few years ago when we reduced the holdings in two IRAs. One contains all SBUX (cost basis of $6) and the other all AAPL. 2019’s RMDs were addressed by surplus accrued dividends. In 2020 we may have to journal transfer a few shares of each to the joint account which happens to already have these issues in place. RMD slam dunk – except for the wife who’d like the cash – hence the alternate funding source.
So there are this lazy man’s goals for 2020 and it sure looks like more work than I’ve seen in awhile. In my spare time I can see how my diverse and weird ideas panned out (or not) to determine the further portfolio reductions so I can return to being a future lazy man! As always, comments, thoughts and criticisms are always welcome.